Woman vs. Wall Street

Cristina Chen-Oster started her fight against Goldman Sachs in 2005. Thirteen years later, she’s still fighting.

Cristina Chen-Oster was settling into her seat for a late-March Broadway matinee of Mean Girls when she remembered to check her voicemail. The day before, she’d ignored a call from an unrecognized number. Now she hit play and heard the voice of her lawyer, Kelly Dermody: “Huge congratulations!” it said. “Really, really, really, really happy for you.”

Dermody was relaying news that Chen-Oster, a former vice president at Goldman Sachs, had been awaiting for years. A federal judge in New York had ruled that she and three other women who claim there’s systematic gender discrimination at Goldman can now represent as many as 2,300 other current and former employees. Chen-Oster read through the decision right there in the theater, where she was celebrating her 47th birthday with her family. “It was wonderful to see my wish come true,” she texted Dermody.

It sounds like a perfect #MeToo triumph. But after 13 years, dozens of lawyers, and more than 580 docket entries, winning class-action status is just the end of the beginning. “Eventually the truth always comes out, it’s just a question of time,” says Chen-Oster, speaking publicly about the case for the first time. “It’s our duty and our right to shine a light.” She represents the sobering reality of what it takes to challenge Wall Street’s problem with women. In an industry adept at keeping embarrassing details quiet, with a culture that fetishizes secrecy and loyalty, the question isn’t why so few women speak up. It’s why any speak up at all.

Hollywood trains us to expect Wall Street women to be nonstop aggressive. But Chen-Oster is warm and relaxed, with a gentle voice and a big laugh. She’s also single-minded, the kind of person who tabulates real-time stats at a fourth-grade basketball game, not just for her own kids (she has two sons and a daughter) but for the entire team. “I am a little bit anal when it comes to keeping score,” she says a few days after the matinee, sitting in an office at Dermody’s law firm in Lower Manhattan. “I think about numbers. And I truly believe that the stats don’t lie.”

Chen-Oster’s family immigrated from Taiwan when she was a baby and eventually settled in a Chicago suburb. Her father worked long days as a doctor, while her mother led a tightknit household of women, including four other daughters and their grandmother. Chen-Oster skipped a grade and went to college at the Massachusetts Institute of Technology, where she majored in biology until deciding that repeatedly beheading lab rats wasn’t exactly enjoyable. She switched to economics and graduated in three years, at age 20. Afterward, she worked for banks in New York, Chicago, and Hong Kong. By 1996 she was back in New York, specializing in the sale of convertible bonds, a type of debt that can turn into equity.

Around Thanksgiving in 1996, she had a drink at the Four Seasons restaurant in Manhattan with three men who pitched her on working for Goldman. She didn’t want to look like a job hopper, so she hesitated. When her clients heard that, they told her she was insane. This was, after all, Goldman Sachs. The firm epitomized Wall Street power, reaching into almost every market, inspiring fierce loyalty, and rewarding stars with fat bonuses. It was also a place where no women or black bankers had made partner until about a decade earlier, but Chen-Oster was used to that. When she joined Goldman in 1997, she was impressed. “They were very focused on firmwide culture,” she says, “and making sure that everyone is marching to the same drumbeat.” She got along with her colleagues. “You liked her right away,” says Mike Fahey, a trader who got to know her at another firm, then ran into her at Goldman. “She was easy to like, she was easy to be around.”

About seven months into the job, Chen-Oster’s team celebrated the promotion of one of the men who’d recruited her. The following account of what happened that night and its aftermath—much of which Goldman disputes—is derived from Bloomberg Businessweek’s interview with Chen-Oster and legal filings.

It started, she says, with dinner downtown, then moved to Scores, a strip club. She got bored and left. A co-worker insisted on walking her the few blocks to her boyfriend’s place. Upstairs, outside the apartment, he pinned her against a wall, kissing and groping her. Then, in the dry language of her complaint, he attempted to “engage in a sexual act.” She fought him off. The next morning, the co-worker pulled Chen- Oster aside, apologized, and asked her not to tell anyone. She was 26 and new to Goldman. She kept quiet.

At the end of the year, Goldman paid her more than she’d been guaranteed, because of her standout performance, she says. But her boss also took away some of her best accounts and transferred them to London colleagues. One man with a similar client base got to keep his, and another who generated less revenue was awarded more than Chen-Oster. She focused on her work.

In 1999, when she thought she’d be moving across the country for another role at Goldman, she decided it was time to tell her boss what had happened that night. His response floored her. It went like, “Oh, that was you?” she says. He’d heard about the incident, but apparently not which woman was involved. He’d even helped the man seek therapy, he told her. Now that she was speaking up, he added, he had to report the matter to Goldman’s human resources department. The boss advised her not to make a big deal of it, according to legal filings. Chen-Oster got the message: This was a formality, not justice. When HR asked for more details, she declined to provide them.

Chen-Oster says her career at Goldman went downhill anyway. Some job responsibilities were siphoned off, and a promising new market in distressed debt was handed to a man she’d trained. Her performance reviews, which helped determine her pay, were assigned to distant colleagues who couldn’t provide meaningful assessments. The man who she says assaulted her—who ranked beneath her at the time—was promoted to managing director, then partner, winning entree into one of Wall Street’s most elite, lucrative, and influential groups. In her eight years at the firm, Chen-Oster never rose above vice president. In that time, her compensation ended up increasing 27 percent, while her alleged assailant’s more than quadrupled, according to legal filings.

It was when Chen-Oster returned from her second maternity leave, in late 2004, that she finally realized she no longer had a place at Goldman. Her team had been reorganized, and she’d been assigned a desk near a group of administrative assistants. They were all women. “It was so clear,” she says. “It was such a visceral, visual representation of how little Goldman cared about my career.” She quit in March 2005.

Gena Palumbo, who oversees employment law for Goldman, says the allegations about the incident, its aftermath, and Chen-Oster’s boss’s response are simply wrong. The way the firm sees it, Chen-Oster is far from a victim. She was her team’s second-highest-paid salesperson of her rank the year after she reported the incident, Palumbo says. She adds that the reshuffling of clients was part of a wider redistribution, and the seating assignment lasted only 10 workdays.

“We’re vigorously defending the firm against what we believe are meritless accusations,” Palumbo says. “The key issues here are that Ms. Chen-Oster significantly delayed reporting the incident to employee relations, and when she did talk to employee relations she declined to provide any detail about the incident, or to in any way cooperate in the investigation.”

Goldman isn’t the only bank that’s had problems with women. Merrill Lynch and Smith Barney settled lawsuits in the 1990s that described pervasive hostility and discrimination. Years later, Wall Street women still privately talk about being grabbed, propositioned, and humiliated.

A few months before Chen-Oster left Goldman, rival investment bank Morgan Stanley agreed to settle a sex discrimination case for $54 million. The plaintiff, Allison Schieffelin, also sold convertible bonds. Chen-Oster took note and contacted the firm that handled that case, Outten & Golden. She filed a complaint in July 2005 with the U.S. Equal Employment Opportunity Commission, which enforces federal laws against workplace discrimination. The decision wasn’t easy. “Worstcase scenario,” she says, “was that I’d leave the industry.”

Goldman responded to the EEOC that September with a letter disputing most aspects of Chen-Oster’s account. It quoted unflattering comments from her performance reviews, including “tends to sweep problems under the rug and never get them solved.” The bank retold what happened the night of the alleged assault, introducing her co-worker’s perspective. It was Chen-Oster who asked the man to escort her, according to this version, and it was she who started touching him.

The government investigation moved very, very slowly. “We did not hear from the EEOC for years,” Chen-Oster says. In 2006 she got a job at Deutsche Bank AG, and in 2010 she made managing director. That same year, the EEOC ended its investigation, dismissing her case but granting her the right to take Goldman to court.

Chen-Oster sued in September 2010. By then, Dermody and her law firm, Lieff Cabraser Heimann & Bernstein, had teamed up on the case with Outten & Golden. Chen-Oster also had two additional plaintiffs: Lisa Parisi, a former Goldman managing director, and Shanna Orlich, an associate. Both had left the firm two years earlier, and all three wanted to turn their individual issues into a class action on behalf of the bank’s women.

They alleged Goldman allowed managers, almost all men, to make biased pay and promotion decisions, with the result that women were systematically denied the opportunities they deserved. They offered the bank’s own figures as evidence: Women made up 29 percent of vice presidents and only 17 percent at the powerful managing director level.

Goldman’s Palumbo says there was no discrimination. “The allegation that managers were allowed to evaluate performance and make promotion decisions based on bias is completely baseless, and it’s contrary to the firm’s policies, practices, and values,” she says. “That was never true.”

Chen-Oster and her co-plaintiffs wanted to force Goldman to change its policies and pay for its mistakes. Class actions allow plaintiffs to sue on behalf of larger groups, and the stakes can be high if the pools are big. Dermody helped women win an $87.5 million settlement from Home Depot Inc. over its promotion policies and worked with uninsured patients who got about $1 billion from California hospital chains for price gouging. She’s also representing women suing Microsoft Corp. “You get to use the power of the aggregated workforce data to attack the firm’s failings,” she says. “You say, ‘Look, this overwhelming trend needs an explanation at a system level.’ ”

As the Goldman case got under way, the judge, Leonard Sand, delegated many of the proceedings to a magistrate, a judge who helps speed up pretrial discovery. In this case, it had the opposite effect. Time and again, when the magistrate found against the bank on an issue, Dermody says, its attorneys asked for reconsideration, or pressed the matter up to Sand for review, or pushed it to an appeals court, dragging out every motion. Palumbo says the notion that Goldman Sachs has been trying to stall “couldn’t be further from the truth.” She and her colleagues “don’t set that structure, we just operate within it.”

The most important offensive move in this kind of case is getting a class certified, which means convincing the court that, among other things, the group faces common problems. The top defensive play is to divide and conquer. Early on, Goldman tried to get two of the women removed as plaintiffs. Parisi had agreed to keep disputes with the bank out of court when she became a managing director, and the bank wanted to deal with her in private arbitration. Goldman won that fight. Chen-Oster, the bank argued, hadn’t made it clear from the beginning that she was suing on behalf of other women, and it called out her use of “me” and “my” in her complaint to the EEOC. Goldman lost that one.

In the middle of all this maneuvering, the U.S. Supreme Court tore up the rules for class actions. Betty Dukes, a greeter at a Walmart store in California, had sued the bigbox retailer for bias against women, hoping to represent some 1.5 million employees across the country. But the high court ruled in June 2011 that millions of decisions by individual managers about women were just that—individual decisions. In such a decentralized system, the justices concluded, headquarters couldn’t be held responsible.

Goldman used the Dukes case to attack, saying Chen-Oster’s was so similar that it should be dismissed without wasting the court’s time. A year later, Sand delivered a mixed ruling. Because the plaintiffs were former Goldman employees, he called into question their right to force the firm to change its current practices. But Sand also declared that the bank’s behavior affected women as a group. And he set the stage for Chen-Oster and Orlich to gather crucial evidence on compensation and complaints.

Goldman initially balked at providing some internal reports of unfair treatment, but a ruling in the plaintiffs’ favor expanded the range of documents they could secure. They got more data, too. In 2014, Chen-Oster’s side finally laid out its class-action case, combining anecdotal complaints from bankers inside the firm with hard pay numbers. Goldman’s female vice presidents, their statistical analysis concluded, were paid 21 percent less than men. The gap, they said, could be explained only by bias. Goldman rejects that analysis. It “is deeply flawed,” Palumbo says. “Different roles have different market values.”

In 2015 the magistrate dealt Chen-Oster and Orlich a huge setback. The women had shown enough evidence that Goldman may have held back women in a systematic way, he said, but he was still recommending they shouldn’t be certified as a class. His hands were tied, he said, by Sand’s interpretation of the Walmart decision. If Chen-Oster wanted Goldman to change, it looked like she’d have to get current bank employees to join her case.

She remembered enough about the firm’s taboos to know that might be impossible. “That kind of step would be viewed as a betrayal,” she says. “You put the firm’s interests first before your own.” But remarkably, two Goldman women did join her. The first, Mary De Luis, a vice president who had worked in the bank’s investment management division since 2010, says in the filings that she complained about unequal pay and was promised a raise but never got it. De Luis queried her supervisors again and was told she’d receive the added compensation gradually, over a couple of years, which they suggested wasn’t a problem because her male companion was a doctor with a substantial income of his own.

The second woman, Goldman trader Allison Gamba, says she quintupled earnings for her stock portfolio, winning a nod from her boss that she’d be put up for managing director. He also told her that she should adopt a child instead of getting pregnant. She mentioned this to a higher-up and didn’t get the promotion, which went to a man. Like Chen-Oster, she’d resisted making a fuss. “I had my head on straight. I did everything right, I jumped through every hoop,” Gamba says. “I did everything that should have gotten me the title that I wanted. And I didn’t get it.” (Goldman’s Palumbo calls the De Luis and Gamba allegations baseless.)

Since the case was filed, Sand had retired. Analisa Torres, appointed by President Barack Obama, took over in 2013. Then the magistrate retired; by then, Sand had died.

In 2017, as #MeToo gathered force, the women’s suit against Goldman remained in limbo. At one point, Goldman was arguing that the fact the case had gone on so long was itself grounds to make it go on even longer. The bank wanted to submit more recent data to show that things had changed. Chen-Oster was still optimistic. “You can’t change the facts,” she says. “You can’t change reality.” Dermody was confident but cautious. In the world of law, after a certain amount of time passes, “there can be this appearance that a case is damaged goods,” she says. “It’s so much easier to say, ‘I agree with the defendants. Let’s get rid of this thing.’ ”

That’s not what Torres did. Going against Sand, she found that the women could hold Goldman to account, even as former employees. In the decision Chen-Oster would read in a Broadway theater, she ruled that Chen-Oster, Orlich, Gamba, and De Luis could represent female associates and vice presidents who have worked in three divisions at Goldman in the U.S. since September 2004 and in New York since July 2002. That makes it one of the biggest lawsuits of its kind on Wall Street.

Torres rendered her decision in memorable style. Goldman had managed to keep parts of the case sealed, but the judge quoted certain details outright in her decision. To show that the women backed up some of their claims, she quoted one Goldman employee telling a male colleague “how it made me uncomfortable how the guys were touching me,” then realizing that “his hand is on my ass.” One colleague “perpetuated a rumor that a sex tape of him with an unidentified woman was actually of him and a female co-worker.” The firm apparently decided to handle that by giving him “a strongly worded” warning.

Palumbo says these details were cited out of context. “Goldman Sachs has a robust internal complaint resolution process,” she says.

In the U.S., President Donald Trump’s administration is working to roll back rules on how businesses behave and what they have to disclose. Recently, Goldman has promised to give more opportunities to women, while also insisting that it’s already a meritocracy. But in a telling sign of where things stand for women on Wall Street, Goldman bragged that its 2016 partner class was 23 percent female, its most diverse yet. That means three out of four new partners were men. In March, days before the firm released figures showing that, on average, its female employees in the U.K. make less than half what men pull in, David Solomon emerged as the front-runner to succeed Lloyd Blankfein as chief executive officer. The group of finalists he beat out were all men.

Chen-Oster’s newly certified class action could go to trial next year. Goldman’s ferocious defense and the long arc of the case so far might seem like a warning to women considering new battles. Chen-Oster takes a sunnier view. She laughs when she recounts how a friend at a different financial firm went to compliance training that, she said, boiled down to: Do whatever it takes to avoid another Chen-Oster vs. Goldman Sachs. “It’s having a positive impact,” she says. “Just raising awareness is a big one right there.”

She wants things to be different for her daughter. When she was born, Chen-Oster gave her a gender-neutral name. “I hope that things will be fine,” she says, “by the time my daughter looks for a job.”